TREASURY

Economic Statistics

Sajid Javid: Following public consultation, the national statistician has today announced that no change will be made to the formula used in the construction of the retail prices index (RPI). The UK Statistics Authority has endorsed this recommendation.
	Under the arrangements set out in the Statistics and Registration Service Act 2007, the independent UK Statistics Authority is responsible for ensuring the quality of official statistics. As such the Government have had no involvement in today’s decision.
	For gilt investors their future cash flows on existing index-linked gilts will continue to be calculated by reference to the RPI in accordance with the terms and conditions of those gilts. The Government will continue to issue new index-linked gilts linked to the RPI.
	The Government will consider any implications of the national statistician’s announcement on their approach to RPI indexation across different policy areas in due course.

HEALTH

Public Health Grants to Local Authorities (2013-14) and (2014-15)

Jeremy Hunt: Today I am announcing ring-fenced public health grants to local authorities for 2013-14 and 2014-15.
	This Government have an ambitious vision to help people live longer, healthier and more fulfilling lives, and to improve the health of the most vulnerable fastest. From April 2013, upper tier and unitary local authorities will take on a new duty to improve their population’s health, funded by this ring-fenced budget. Local authorities are best placed to understand the needs of their communities, and to tackle the wider determinants of health at a local level, putting people’s health and well-being at the heart of everything they do—from adult social care to transport, housing, planning and environment. The public health grants will allow local authorities to transform the lives of the local people through commissioning a wide range of innovative services.
	Despite difficult financial circumstances, I am pleased to announce that we have been able to provide an above inflation growth representing a major investment in health and the prevention of illness. We are investing £2.7 billion in 2013-14 and £2.8 billion in 2014-15. In each year every local authority will see real-terms growth. This is on top of an updated 2012-13 baseline that is now just over £2.5 billion, significantly above the estimate of £2.2 billion that we published in February last year.
	Announcing allocations for the next two years will provide local authorities the certainty they need to extend and develop their planning, including for initiatives that may be better delivered across more than one year.
	The allocation is built on the advice of the independent Advisory Committee on Resource Allocation (ACRA). ACRA’s interim recommendations went through an intensive engagement during the summer, generating some important changes that we believe will be welcomed by the public health and local government communities.
	Full details of the public health grants to local authorities have been placed in the Library. Copies are available to hon. Members from the Vote Office and to noble Lords from the Printed Paper Office.

JUSTICE

Prison Capacity Management

Chris Grayling: Our strategy for the custodial estate is to ensure that we have sufficient places to meet the demand of the courts while securing best value for money for the taxpayer.
	My intention is to have more adult male prison capacity available than we had in 2010 but at a much lower unit and overall cost. Our strategy for achieving this is to replace accommodation which is old, inefficient or has limited long-term strategic value with cheaper modern capacity which is designed to better meet the demand for prison places and supports our aim to drive down stubbornly high reoffending rates. I am also announcing today that the Government are to start feasibility work on a new prison that could hold more than 2,000 prisoners—around a quarter more than the largest current facility.
	At present, we have buildings within the prison estate which date back to the 18th century. Prisons are not all located where we would want them to be to best meet the needs of the courts or support resettlement and there is an annual maintenance cost of approximately £184 million. There is clear evidence that by replacing old uneconomic places with modern prison capacity we can drive substantial savings for the taxpayer and I am determined to do just that.
	Last year we opened a significant amount of new accommodation including 1,600 places at HMP Oakwood in the west midlands. The average cost at Oakwood is £13,200 per place. This is less than half the average cost of existing prison places, and sets the benchmark for future costs. In order to further drive down unit costs in prisons, I can today announce that we plan to significantly increase capacity at four existing prisons by building additional houseblocks to provide up to 1,260 new modern and cost-effective places. Our current intention is that new accommodation will be built at HMP Parc in Bridgend, HMP Peterborough in Cambridgeshire, HMP The Mount in Hertfordshire and HMP Thameside in London.
	These houseblocks, along with Oakwood, which is now reaching capacity, represent over 2,800 new places. This provides the opportunity to close excess capacity elsewhere in the estate.
	I am therefore announcing that we will close around 2,600 old and uneconomic places through the closure of six prisons and the partial closure of accommodation in three other sites. The affected establishments are:
	
		
			 Closures Partial Closures 
			 Bullwood Hall Kingston Chelmsford 
			 Canterbury Shepton Mallet Hull 
			 Gloucester Shrewsbury Isle of Wight 
		
	
	The decision to close, or partially close places in these establishments is based on the suitability, sustainability and the cost of this accommodation.
	Closures form just one part of our strategy to improve the operation of our prison estate and drive down the costs to the public. We will also decommission 200 contractually crowded places at private prisons, which are not currently needed.
	We will continue to ensure that our estate reflects prison population demands, and in line with the falling population in the youth estate, I can also announce that we intend to negotiate a change to the function of HMYOI Ashfield and re-role it to a prison to hold adult male prisoners. I intend to work with the Youth Justice Board to review the operation of the youth estate to ensure that it provides effective education and training for young people while delivering value for money to the taxpayer.
	Furthermore, I am conscious that women offenders have particular needs and that the custodial female estate should be organised as effectively as possible to meet gender-specific requirements while also delivering best value for the public. I have therefore asked officials to undertake a review of custodial arrangements for women. I expect this review to be completed by the summer.
	As part of our strategy to modernise the estate and significantly reduce unit and overall costs, I have asked officials to explore options for building a new prison to enable us to accelerate the closure of uneconomic capacity across the rest of the estate. We will consider the feasibility of sites in the north west, north Wales and in London in line with demand for places in these regions and I will provide further details to the House as this work progresses.
	Overall, this capacity reduction will save £63 million per year from the cost of running our prisons. These savings are in addition to the plans we have already set out to the House for how we propose to make significant cost reductions over the next few years through the application of an efficient benchmark for all public sector prisons, and through further competition of services.
	This Government are determined to ensure that we have a resilient custodial estate with sufficient capacity available to meet the demands to imprison those committed by the courts. We also intend to ensure that the cost of a prison place is dramatically reduced. The strategy I am outlining today will help achieve both these aims.

TRANSPORT

Rail Franchising

Patrick McLoughlin: When I took the decision last October to cancel the competition for the inter-city west coast rail franchise and to put the wider franchising process on hold, I commissioned two independent reviews.
	I am today laying before the House the second of these, by Richard Brown, the chairman of Eurostar and a highly respected industry figure. His report sets out his recommendations on how best to get the franchising programme back on course. I welcome this report, and am grateful to Mr Brown and his team for their swift and thorough consideration of the issues.
	Mr Brown concludes that franchising is a fundamentally sound approach for securing the passenger railway services on which so many people rely. He has identified a number of detailed recommendations for improving the way that franchises are specified and franchise competitions are run. The issues he has identified deserve, and will get, very careful consideration. His recommendations include:
	that the franchising programme should be restarted as soon as possible, but at a pace that both the Department and the industry can sustain;
	that franchise term should be determined by the circumstances and size of each individual franchise;
	proposals to strengthen and simplify the bidding and evaluation process for each franchise;
	proposals for the financial and contractual structure of future franchises, including in relation to risk allocation and capital requirements; and
	that the Government should plan to devolve responsibility for further English franchises to the relevant authorities.
	Mr Brown also makes recommendations on how to strengthen my Department’s capability to manage the future franchising programme, echoing the findings of Sam Laidlaw’s independent inquiry into the lessons to be learnt from the inter-city west coast competition. My Department has already published a response to Mr Laidlaw’s report, setting out a series of actions that will allow it to resume the franchising programme, with the confidence of the rail industry, as soon as possible. The permanent secretary has now appointed a single director-general with responsibility for rail, including franchising.
	The review recommends that the Government should determine, by February, our plans for the three franchise competitions which I put on hold last October. I accept that recommendation, and I will update the House when I have determined those plans.
	Until then, however, I consider that it would be inappropriate to publish Mr Brown’s specific recommendations about these three franchise competitions because of their stock market sensitivity, and so I have redacted the relevant paragraphs from the version of the report I have published today. I will publish the redacted paragraphs once I have decided the way forward for those three competitions.
	Mr Brown also recommends that we should set out a clear programme for future franchise competitions. I will do so in the spring, alongside a further statement of the Government’s rail franchising policy in the light of Mr Brown’s recommendations and the Transport Select Committee’s “Rail 2020” report.